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To kill bitcoin. Do popular cryptocurrency has any future after Chinese restrictions?

Author : Iryna Shostak

Source : 112 Ukraine

By June 20, cryptocurrency farms were banned in 5 provinces of the country. In particular, one of the largest centers for the "extraction" of digital assets in the Sichuan province suffered
22:44, 30 June 2021

Open source

Cryptocurrency prices fell over the weekend. Market experts associate the fall with negative news from China - several provinces of the country have banned the operation of mining centers in their territories. Since this is not the first encroachment on the welfare of digital assets by the government of the Celestial Empire, there is panic in cryptocurrency chats: does bitcoin have a future without such a major player as China?

In China, measures to combat mining are being tightened. By June 20, cryptocurrency farms were banned in 5 provinces of the country. In particular, one of the largest centers for the "extraction" of digital assets in the Sichuan province suffered.

Since about 65% of the computing power used for mining bitcoins is located on the territory of the Celestial Empire, such news really excited the public.

In addition, not so long ago, the People's Bank of China banned a number of major banks and payment systems, in particular Alipay, from participating in crypto transactions. It is not allowed to offer customers any services related to digital currency. For example, asset exchange, registration, trade, settlements, and ICO (initial coin placement to attract investment).

All these restrictive measures led to a market collapse: over the past month, the bitcoin rate fell by tens of percent (over the month, the asset fell by 18%, and on June 22, its value dropped below $ 30,000 for the first time since January of this year), Ethereum sank and Dogecoin collapsed, the value of shares of cryptocurrency exchanges and some companies associated with the digital asset market fell.

Given the volume of the crypto market in the PRC and the influence of the Celestial Empire on the actions of the states of the Asia-Pacific region, this trend is frightening. Is it temporary difficulties or the beginning of the end of the crypto world?

Why China is pushing out the crypt

The PRC government describes its actions as "forced measures, which are designed to warn against cases of speculation and money laundering." Regulators note that cryptocurrencies are "not backed by real value." Allegedly, their prices are easy to manipulate, and trade contracts are not protected by Chinese law.

In particular, this position was declared in January 2021 by the head of the European Central Bank Christine Lagarde, noting that bitcoin really needs to be regulated.

But there are other opinions as well. First, the PRC government protects itself from possible risks, in particular the so-called "51% attack."

"China is afraid that more than 50% of the hash rate of the network will be located in one place because in this case there is a risk of a 51% attack (an attack on the blockchain network, where one object or organization can control most of the hash rate, which can lead to disruption) ", - explains in the commentary CMO of synergia.fund, influencer Dmytro Kryshtal.

In addition, in this way, you can change the information in the blocks inside the bitcoin blockchain (data on all transactions carried out by the participants in the system).

And secondly, most likely, the government of the Celestial Empire is "clearing the field" for its digital player - the yuan (it is planned to launch the domestic electronic currency by 2022).

"The strategy is not completely clear. Most likely, they will launch the digital yuan as an international unit of account, and first of all, it will compete with the US dollar rather than with the crypto," Mykhailo Chobonyan, founder of the KUNA.io cryptocurrency exchange, says in a comment to 112ua.tv.

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One way or another, but in the medium term, according to the expert, the risk really exists: the country's government may start all sorts of attempts to ban the circulation of the crypt so that everyone can use the digital yuan.

But to what extent is such minimization of the impact of the bitcoin expedient? After all, the right of ordinary citizens to own a crypt is preserved.

Is the bitcoin alive?

The restrictions of the Celestial Empire have really reduced the rate of production of bitcoin. Miners began to leave the country.

"All capacities from China are now actively exported to Kazakhstan, Russia, the United States. There are no flows to us because of corrupt officials who want to make money on this. Although we could take a lot thanks to nuclear power plants," Chobonyan notes.

But if we talk about the "circulation" of crypto and its use as an international digital currency, a wave of Chinese restrictions may cover the crypto boat, but not sink it. Indeed, in addition to the Celestial Empire, there are still many influential players on the market, in particular America, the European Union, and developing countries, which have repeatedly supported the digital currency.

Moreover, according to experts, even if the bitcoin falls in the short term, this does not mean that it will cease to exist and perform its functions.

"I believe we will have a fairly long flat when the price does not rise or fall," notes CMO synergia.fund.

After all, while some create trends, others make money from them. That is, while the Chinese central bank, Goldman Sachs or Elon Musk, as strong newsmakers, are, for example, lowering the price of crypto with their statements, other market players are taking advantage of the moment and buying it.

For example, according to expert Dmytro Kryshtal, Alameda Research (one of the largest funds that buy crypto) has already announced that it is going long (a position that a trader opens in the hope of profit from market growth). In simple words, a trader buys stocks cheaply, waits for the price to rise, sells stocks at a high price, and thus profits from the growth of the market.

Of course, this is risky, because it is difficult to predict further actions in a given situation. Musk can pump the price up, and China can dump it down. But this volatility definitely plays into the hands of speculators, traders, and businesses.

"Yes, the bitcoin is volatile. But this is its essence. This is the price we pay to be free to dispose of the crypt. I am willing to pay the cost of volatility and be sure that this is my crypt, unbiased and apolitical, and that nobody will take it, unlike the banking system, "sums up Mykhailo Chobonyan.

By the way, at the time of this writing, the cost of bitcoin is already recovering to the "Chinese" pre-crisis level and amounts to $ 34.620 per unit.

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